How to Qualify as a Foreign Business in North Dakota

Learn the rules for qualifying your LLC to do business in North Dakota.

By , Contributing Author

If you own a business that was created in a state other than North Dakota, you will need to qualify or register that business in North Dakota if you want to do business there. Here is an overview of the rules on how to qualify your foreign (non-North Dakota) limited liability company (LLC) to do business in North Dakota.

What is a Foreign LLC?

For North Dakota purposes, if your LLC is formed in another state, then it is known as a foreign LLC in North Dakota. In other words, foreign doesn't mean from another country. Instead, it means your business was organized under the laws of another state. A domestic LLC, on the other hand, is one that is formed in the state where it is doing business. This is common usage throughout the United States. For example, an LLC formed in Alabama is a foreign LLC in Mississippi.

Transacting Business in North Dakota

According to North Dakota's LLC Act, you are required to register your foreign company with the state of North Dakota if you are "transacting business" in North Dakota. What does this mean? Well, like most states, North Dakota's LLC Act does not specifically define the phrase "transacting business" in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state's residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules can get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo's articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, North Dakota's LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • having an office, agency, or persons in the state for handling your company's own securities
  • holding title to and managing real or personal property located in North Dakota as executor of the will or administrator of the estate of any decedent, as trustee of any trust, or as guardian of any person or conservator of the estate of any person
  • making, participating in, or investing in loans, or creating, as borrower or lender, or otherwise acquiring, indebtedness or mortgages or other security interests in real or personal property
  • securing or collecting debts; and
  • conducting an isolated transaction within a period of thirty days that is not one in the course of similar, repeated transactions.

For the full legal description of each of the listed items, check Section 10-32.1-82 of the LLC Act. If your LLC's only activity in North Dakota is one or more of the listed items, you should not need to register with the state.

Certificate of Authority

To register your business in North Dakota, you must file a Certificate of Authority Application: Foreign Limited Liability Company with the North Dakota Secretary of State (SOS). You can download a copy of the application form from the SOS website.

To complete the form, you must provide more or less the same information that you need to create an LLC in your home state. However, since every state is a little different, there may be items that North Dakota asks for that you did not need to provide when you first organized your LLC. More specifically, for the North Dakota application, you need to provide:

  • an indication of whether your LLC is a professional LLC
  • optionally, your LLC's federal ID number (usually this is an EIN)
  • the name of your LLC as it appears in the records of the state where it was formed
  • if applicable, the trade name under which you will register your LLC in North Dakota (you may use a trade name for one of several reasons, such as if your LLC's original name, or something very similar, is already being used by another registered North Dakota business)
  • the street address of your LLC's principal office
  • the state where your LLC was formed
  • the duration of your LLC (which may be perpetual)
  • the telephone number of your LLC's principal office
  • either the name of your commercial registered agent in North Dakota, or the name and street address of your noncommercial registered agent in North Dakota
  • a statement of the nature of the business or activities your LLC will conduct in North Dakota
  • the names and addresses of your LLC's managers, including indications of any who are governors, and of any managing members
  • a statement that the person signing the application has read it and believes its contents to be true (the statement is included on the downloadable application form), and
  • an authorized signature along with a date, name of person to contact about the application, email address, and phone number.

You must include with your application a certificate of good standing or certificate of existence authenticated by the organizing officer (such as the secretary of state) of the state where your LLC is organized. The certificate must have been certified within 90 days of filing the application.

If you want or need to use a trade name, you must include a trade name registration, which you can download from the SOS website. For more information on trade name issues, review the instructions included with the certificate of authority application form.

The application filing fee is $135. The trade name registration fee is an additional $25.

What Happens if You Don't Register?

If your LLC does business in North Dakota without having a certificate of authority, it cannot bring a lawsuit in the state. It also will be liable for a civil penalty of up to $5,000 and may be prohibited from transacting further business in the state until penalties are paid. In addition, each LLC governor, member, or agent who authorizes, directs, or participates in the transaction of business in North Dakota without a certificate of authority will be subject to a civil penalty of up to $1,000. However, not having a certificate of authority does not invalidate your LLC's contracts or prevent your LLC from defending a lawsuit in the North Dakota.

Registering a Foreign Corporation

If your business is organized as a corporation rather than an LLC, the rules and requirements for foreign qualification in North Dakota are similar. You will, however, have to use a different application form, Form SFN 13100, Certificate of Authority Foreign Corporation Application. See the North Dakota Secretary of State website for forms and filing instructions.

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